Director Disqualification Solicitors

Take advice before responding and observe the deadline. The letter sets out the allegations the Insolvency Service intends to pursue and invites a disqualification undertaking. A well prepared response can persuade the Insolvency Service to drop the case, narrow the allegations or reduce the period sought. Silence, by contrast, usually leads to proceedings on the Insolvency Service’s version of events.

A voluntary undertaking given to the Secretary of State under section 7 of the Company Directors Disqualification Act 1986, with the same legal effect as a court order. It avoids a public hearing and ends the risk of paying the Insolvency Service’s costs. The period and the schedule of unfit conduct are negotiable, and both matter: the schedule is a public document that follows you. We negotiate undertakings that do the least possible damage.

Between two and fifteen years. The courts apply three brackets: two to five years for less serious conduct, six to ten years for serious conduct, and eleven to fifteen years for the most serious cases, which typically involve dishonesty. The bracket contended for is one of the most important issues in any negotiation or hearing.

Not a company, without court permission. A disqualified person may trade as a sole trader or in an ordinary partnership, but may not act as a director, directly or indirectly, or take part in the promotion, formation or management of a company. Under section 17 the court may grant permission to act as a director of a named company, usually subject to conditions such as independent oversight. We prepare and present permission applications.

It is a criminal offence under section 13 of the Act, punishable by imprisonment, and under section 15 the person becomes personally liable for the relevant debts of the company. Anyone who acts on the instructions of a disqualified person can also be made liable. The consequences are severe enough that any involvement with a company during a ban should be taken only after advice.

Disqualification itself does not, but the conduct that founds it often supports parallel claims. A liquidator may pursue claims for wrongful trading, misfeasance or unlawful dividends, and a compensation order can be sought against a disqualified director where creditors suffered identifiable loss. Defending the disqualification and managing the related claims together is usually the right strategy.

Yes, in the right circumstances. The Insolvency Service discontinues investigations where the response shows the conduct was reasonable, properly advised or outside the director’s control, and courts dismiss proceedings where unfitness is not made out. The prospects depend heavily on the contemporaneous records: board minutes, professional advice and the financial information available at the time decisions were made.